Investors Buy The Dip In The AI Trade

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Rob Black (0:11)

October 19, 2026, thanks for listening to the show. Chip stocks are bouncing back as the rest of the market is working, but chip stocks are doing the heavy lifting today. We see the SP 500 up 90 basis points, 66 points to 77.26. The Dow Jones Industrial Average up 1 5th of 1% to 52,115.

The Nasdaq up 1.69% up 442 points to 26,581. The Russell 2000 up 1 half of 1% sitting at 27.36. And the 10-year Treasury sits at 5.13% well off of the recent spike. Some people are crossing their fingers and saying the recent peak of the 10-year at above 5.5.

So it cooled off enormously last week, which is interesting to say because some weeks it seems to go higher. I would say the one most important stock right now that we're watching is Oracle. CoreWeave stock is rebounding today on Goldman Sachs upgrade to buy. It's up 2.8%. A lot of stress hit the AI trade last week as people are starting to question if Anthropix should really be a $2 trillion company when they come public based on their revenue run rates. Then we got into stores last week where CoreWeave's debt is basically like an individual's debt who has a bad credit score. It's making borrowing cost extremely expensive for the data center world unless you're a hyperscaler. If you're just a guy who's going to fill in the blanks of demand, you're going to borrow at an enormous cost right now. So these are 2 things we're watching. If Oracle cracks, the AI trade goes lower. If Oracle's debt gets slapped around a little bit more, that would be a bad sign for the AI trade. Elon Musk says he's giving SpaceX stock to every kid in America.

SpaceX has surprised Wall Street with an October 20 earnings date a little bit sooner than what we thought. Amazon stock is popping this morning after Morgan Stanley detailed 5 catalysts and lift the price target. I'll go over that in just a minute. Goldman Sachs is still betting on a nice year-end rally for the S&P 500

This roadster car and that demo, it's really got a lot of people questioning. If it's not going to be street legal, is it really a car? And street legal meaning, does it have crumple zones? This thing has air compressors in it. It's got moving hydraulic parts in the outside of the car, which would probably imply that it's not going to be able to be crumple zoned into a nice safety accordion style car that might save your life in a car accident. It's going to be really interesting because clearly you're not going to be able to go out on the road with those things. And what's amazing is that Elon Musk pulled off that demo. In a demo that could have been disastrous, and what I mean by that is the car wrecked if it didn't land. That's a bold, controlled demo. You see companies like Meta and Apple, Snap, where they pre-record their demos to show you, here's all the new features of the glasses. And they have to pre-record them in ideal Internet conditions and ideal scenarios with similar questions asked before. It's pretty interesting to the world of demos, tech demos and how much we're actually being fooled. So, Goldman Sachs is still betting on a nice year at rally for the SP500. I think that's a good place to start right now. Goldman Sachs strategy has been Snyder maintained as 8,000 year in SP500 target. That's about 5% upside from the current level.

He's not concerned about the AI bubble bursting. If you jump on to X or threads, you'll see everyone's talking about the market bursting. He's not seeing any sign of problems. I'm not going to put those words in his mouth. But he sees us wrapping up 2027 at around 8,700. He sees positive but decelerating growth, which has historically been associated with positive but moderating SP500 earnings. Equity returns in these environments have historically been driven by earnings growth rather than by valuation expansion.

He's modeling for 36% earnings growth for the SP500 this year, cooling to an 11% increase in 2027 Snyder's defense of a solidly bullish outlook comes as the very driver of the markets this year. Tech stocks are playing a key role in the AI boom. They're falling right now and they're being scrutinized. Like I mentioned earlier, CoreWeave. It's a Neo Cloud. Me personally, if you want to try to trade the Neo Clouds, you can, sure. But their debt makes them questionable, in my opinion, as investments, until that cash flow can service that debt better. Take a look at some of your favorite names out there. Micron's up 5% today, SanDisk up 7.6%.